Small-cap stocks may not always make the headlines, but they can offer significant long-term growth potential for investors willing to take on more risk. While large-cap stocks have their place in popular indices like the S&P 500 and Nasdaq Composite, it’s important to remember that even these giants started off as small companies. Some mega-cap firms were once penny stocks that have since rewarded patient investors.
Investing in small-cap stocks requires more due diligence as they receive less coverage compared to their larger counterparts. Investors need to sift through earnings reports, press releases, and understand the underlying business model to identify solid investment opportunities. Despite the extra research involved, the potential for substantial gains makes small-cap stocks worth considering.
Three small-cap stocks that are worth keeping an eye on for potential growth are Beazer Homes (BZH), Sezzle (SEZL), and Dave (DAVE).
Beazer Homes, a home construction company based in Atlanta, Georgia, has seen its shares nearly triple in the past five years. With a market cap just under $1 billion and a low P/E ratio of 6, Beazer Homes is well-positioned for future growth. The company’s strong financials and potential for increased business due to lower interest rates make it an attractive investment opportunity.
Sezzle, a buy now pay later fintech firm, has seen its stock value quadruple this year. With a market cap of around $500 million and a forward P/E ratio of 17, Sezzle is growing rapidly and is expected to continue its upward trajectory. The company’s strong earnings report for Q1 2024 highlights its potential for future profitability.
Dave, a fintech app launched in 2017, has seen its shares surge by 357% year-to-date. With a market cap of $460 million and profitable quarters under its belt, Dave is poised for further growth. The company’s consistent revenue growth and expanding member base position it well for long-term success.
In DailyBubble’s opinion, small-cap stocks like Beazer Homes, Sezzle, and Dave offer investors the potential for significant gains over the long term. While investing in small-cap stocks carries more risk, the rewards can be substantial for those willing to do their homework and stay patient.